One of the biggest mistakes new investors make is buying overvalued stocks. In strong bull markets, like now, investors see prices going up and join for the ride. Today, investors are excited about advances in artificial intelligence (AI), and many top AI stocks are priced at high valuations.

More seasoned investors know that once a stock becomes well-known and hyped up, it has often reached a peak, and that’s the worst time to buy it.

One great example from this year is Sandisk, which reached a peak of $2,335 in June, a 6,390% year-to-date increase, as memory became AI’s hottest commodity. However, it also reached a P/E ratio of 81 at that time, and the stock is down 17% since then.

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The problem for any…